Wendy's Chili:If they manage to overturn franchise laws and sell directly to customers, that would be a huge disruptor. However, guys like dealership owners tend to have a lot of sway in local politics.

It would disrupt the retail chain but not the car companies. The manufacturers would gleefully piggyback on the success of Tesla in doing that- they'd love to cut dealers out of the loop (GM had tried with Saturn, failed, and settled for giving Saturn dealerships to particular dealer chains based on geography). If the manufacturers didn't want to do that they could easily back their dealers and kill the entire effort to overturn franchise laws.

Tesla is nothing more than a nice product right now. As they push into other parts of the market and build volume they're going to be taken more seriously and run into harder competition from the traditional automakers. It isn't going to be that hard for Toyota to make a BEV Camry and they'll be able to do it at a price Tesla can't match. Ditto any other automaker with their volume models. If they see a big market for that they'll be all over it... I'd be surprised if automakers don't have plans to do exactly that in the next few years if consumers begin to demand midsize BEVs.

Google's the disruptive force. In the autonomous-car utopia coming in a couple decades, if you live in a city or suburb you won't need to own a car, just order up one to take you from your house to point A and another to take you back. Or have a compact take you to Home Depot and a truck take you and your purchases back. Etc.

It WAS highly disruptive originally. Prior to the 1970s, the car industry had focused largely on style and performance in car design; Toyota focused on quality. That was quite disruptive at the time.

akula:It would disrupt the retail chain but not the car companies. The manufacturers would gleefully piggyback on the success of Tesla in doing that- they'd love to cut dealers out of the loop

Also this. It annoys me to no end that people think the big players (Ford, Toyota, etc) are the ones trying to stop Tesla from selling directly to the customer, when in reality it's the dealers that are fighting that. The OEMs would love nothing better than to be able to take direct control of their distribution and sales (and be able to cut prices for customers without sacrificing profit margin for the OEM).

HMS_Blinkin:It annoys me to no end that people think the big players (Ford, Toyota, etc) are the ones trying to stop Tesla from selling directly to the customer, when in reality it's the dealers that are fighting that. The OEMs would love nothing better than to be able to take direct control of their distribution and sales (and be able to cut prices for customers without sacrificing profit margin for the OEM).

And make the experience better for the customers; dealing with dealers is the one thing (almost) everyone hates about car buying.

Gaseous Anomaly:HMS_Blinkin: It annoys me to no end that people think the big players (Ford, Toyota, etc) are the ones trying to stop Tesla from selling directly to the customer, when in reality it's the dealers that are fighting that. The OEMs would love nothing better than to be able to take direct control of their distribution and sales (and be able to cut prices for customers without sacrificing profit margin for the OEM).

And make the experience better for the customers; dealing with dealers is the one thing (almost) everyone hates about car buying.

Exactly. Dealers are middlemen that only exist because of state-level legislation that requires them to do so. Take away those laws (which Tesla might be able to do), and you take away that particular market inefficiency.

akula:Wendy's Chili: If they manage to overturn franchise laws and sell directly to customers, that would be a huge disruptor. However, guys like dealership owners tend to have a lot of sway in local politics.

It would disrupt the retail chain but not the car companies. The manufacturers would gleefully piggyback on the success of Tesla in doing that- they'd love to cut dealers out of the loop (GM had tried with Saturn, failed, and settled for giving Saturn dealerships to particular dealer chains based on geography). If the manufacturers didn't want to do that they could easily back their dealers and kill the entire effort to overturn franchise laws.

Tesla is nothing more than a nice product right now. As they push into other parts of the market and build volume they're going to be taken more seriously and run into harder competition from the traditional automakers. It isn't going to be that hard for Toyota to make a BEV Camry and they'll be able to do it at a price Tesla can't match. Ditto any other automaker with their volume models. If they see a big market for that they'll be all over it... I'd be surprised if automakers don't have plans to do exactly that in the next few years if consumers begin to demand midsize BEVs.

Considering that Tesla is about to build a factory that will singlehandedly double the world's supply of lithium-ion batteries, I think Toyota et al. will be playing catch-up for a while if they want to compete directly with Tesla.

anfrind:Considering that Tesla is about to build a factory that will singlehandedly double the world's supply of lithium-ion batteries, I think Toyota et al. will be playing catch-up for a while if they want to compete directly with Tesla.

It only matters if they can sell enough cars to cover the full production of the factory. If they can't they'll be begging other companies to buy them.

Obtaining the batteries is only one of the parts of the vehicle. Being able to amortize the costs of chassis development over hundreds of thousands of vehicles is even more important. Companies like Toyota and Ford have access to economies of scale that make Elon Musk cream his shorts.

anfrind:akula: Wendy's Chili: If they manage to overturn franchise laws and sell directly to customers, that would be a huge disruptor. However, guys like dealership owners tend to have a lot of sway in local politics.

It would disrupt the retail chain but not the car companies. The manufacturers would gleefully piggyback on the success of Tesla in doing that- they'd love to cut dealers out of the loop (GM had tried with Saturn, failed, and settled for giving Saturn dealerships to particular dealer chains based on geography). If the manufacturers didn't want to do that they could easily back their dealers and kill the entire effort to overturn franchise laws.

Tesla is nothing more than a nice product right now. As they push into other parts of the market and build volume they're going to be taken more seriously and run into harder competition from the traditional automakers. It isn't going to be that hard for Toyota to make a BEV Camry and they'll be able to do it at a price Tesla can't match. Ditto any other automaker with their volume models. If they see a big market for that they'll be all over it... I'd be surprised if automakers don't have plans to do exactly that in the next few years if consumers begin to demand midsize BEVs.

Considering that Tesla is about to build a factory that will singlehandedly double the world's supply of lithium-ion batteries, I think Toyota et al. will be playing catch-up for a while if they want to compete directly with Tesla.

Most of those batteries will be going straight into Tesla products. They're not the same kind of batteries that Toyota uses in their wildly successful hybrids, so Toyota probably isn't too worried about a battery shortage where their own products are concerned.

That said, Toyota owns a good chunk of Tesla (you know that, right?). They practically gave him the NUMMI plant, just to get it off their hands. Tesla was required to go public according to Toyota's terms for the investment. Toyota isn't afraid of Tesla, they're the ones Musk owes thanks to. They even threw Tesla a bone with the contract for the Rav4EV, which is a failure that will soon be cancelled...

akula:I'd be surprised if automakers don't have plans to do exactly that in the next few years if consumers begin to demand midsize BEVs.

One problem is that the reason Musk wants to build the factory is that even at Tesla's current 'insignificant' production levels they're consuming a significant amount of the world's LiIon production capability.

As such, any car company planning to swamp Tesla with their own car type, for cheaper, is going to have to come up with a way to obtain the batteries themselves, and if Musk owns that factory, he has a significant economic advantage.

akula:Obtaining the batteries is only one of the parts of the vehicle. Being able to amortize the costs of chassis development over hundreds of thousands of vehicles is even more important.

As I mentioned, current Tesla production is battery limited -the gigafactory, planned to be able to produce 35GWh by 2020, enough for 500k cars/year, is what he needs in order to be able to obtain the economy of scale of 'hundreds of thousands of vehicles'.

Firethorn:One problem is that the reason Musk wants to build the factory is that even at Tesla's current 'insignificant' production levels they're consuming a significant amount of the world's LiIon production capability.

As such, any car company planning to swamp Tesla with their own car type, for cheaper, is going to have to come up with a way to obtain the batteries themselves, and if Musk owns that factory, he has a significant economic advantage.

Tesla uses a significant percentage of the world's supply of 18650 *laptop* batteries. Other automakers use an entirely different chemistry and form factor. They'd never buy batteries from Tesla, because Tesla doesn't make the type they use.

LG Chem (supplier to GM, Ford, Hyundai, and Renault) currently has enough capacity to build batteries for 350,000 BEVs per year, which is currently much larger than the market demand. Nissan uses Polypore. A123 was recently acquired by Wanxiang, who has plans for major investments and improvements. Tesla doesn't use any of *those* batteries, which is why they're having to build their own plant with Panasonic (their current supplier).